Fast food traffic improves but continues to decline

McDonald’s and other fast-food chains have relied on value to attract traffic. | Photo courtesy of McDonald’s.

Traffic to fast-food chains fell 2.3% in the second quarter, according to new data from Revenue Management Solutions (RMS), continuing the industry’s struggles with customer numbers amid consumer frustration over price increases.

But traffic figures improved from the previous quarter, and there were signs that operators were more cautious about raising prices.

The 2.3% decline is a sequential improvement from the 3.5% decline in the first quarter. This could be due to easier comparisons, milder weather or a greater focus on value among chains.

Yet many of the bargain deals offered by fast food chains have only been rolled out relatively recently, so their full effect may not be seen until third-quarter data is released.

Other industry data indicated that value offerings from major chains, including McDonald’s and Starbucks, helped drive traffic, at least in the short term.

Operators have nonetheless scaled back their price increases. According to RMS, average prices rose 2.9% year-on-year in the second quarter. That’s down from 4% in the first quarter and well below most of the price increases the industry faced last year to adjust to high inflation.

RMS data shows that net sales at fast food restaurants increased 1.7% in the second quarter as customers paid higher prices and ordered more food per transaction during the period.

Traffic at fast-food chains also shifted from drive-throughs to other formats. Delivery traffic increased 12.8% in the second quarter, continuing its strong growth, while restaurant traffic increased 8.3% as the sector continued its recovery. Takeout traffic increased 7.6%.

On the other hand, drive-in traffic decreased by 10.9%. Drive-in remains the main source of traffic for fast food restaurants.

The continued growth in deliveries could be an indication that wealthier customers, who are more likely to order deliveries, are less concerned about rising prices.

This year, the industry is paying increased attention to customer numbers as brands work to attract customers back to their restaurants. Price hikes have frustrated consumers, and many, especially lower-income diners, have had to turn to cheaper restaurants or leave their establishments altogether.

McDonald’s, Burger King, Taco Bell, Subway, Wendy’s and other fast-food brands have shifted their marketing more toward value, hoping that more persistent marketing of discounted meals could keep customers coming back.

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